Question

Skysong Golf Inc. was formed on July 1, 2019, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $810,000 cash for Old Master. At the time, Old Master’s balance sheet reported assets of $650,000 and liabilities of $220,000 (thus owners’ equity was $430,000). The fair value of Old Master’s assets is estimated to be $840,000. Included in the assets is the Old Master trade name with a fair value of $6,000 and a copyright on some instructional books with a fair value of $52,800. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.

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Prepare the intangible assets section of Skysong Golf Inc. at December 31, 2019.

SKYSONG GOLF INC. Intangibles Section of Balance Sheet choose the accounting period                                                                      For the Month Ended December 31, 2019December 31, 2019For the Year Ended December 31, 2019
enter a balance sheet item					$enter a dollar amount
enter a balance sheet item					enter a dollar amount
enter a balance sheet item					enter a dollar amount
select a closing section name                                                                      Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesNet Income / (Loss)Property, Plant and EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders' Equity					$enter a total amount for this section

How much amortization expense is included in Skysong income for the year ended December 31, 2019?

Amortization expense

$enter Amortization expense in dollars

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Prepare the journal entry to record amortization expense for 2020. Prepare the intangible assets section of Skysong Golf Inc. at December 31, 2020. (No impairments are required to be recorded in 2020.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

SKYSONG GOLF INC. Intangibles Section of Balance Sheet choose the accounting period                                                                      For the Year Ended December 31, 2020December 31, 2020For the Month Ended December 31, 2020
enter a balance sheet item					$enter a dollar amount
enter a balance sheet item					enter a dollar amount
enter a balance sheet item					enter a dollar amount
select a closing section name                                                                      Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesNet Income / (Loss)Property, Plant and EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders' Equity					$enter a total amount for this section

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At the end of 2021, Magilke is evaluating the results of the instructional business. Due to fierce competition from online and television (e.g., the Golf Channel), the Old Master reporting unit has been losing money. Its book value is now $460,000. The fair value of the Old Master reporting unit is $380,000. Magilke has collected the following information related to the company’s intangible assets.

Intangible Asset		Expected Cash Flows (undiscounted)		Fair Values
Trade names		$18,000		$6,000
Copyrights		60,000		55,000

Prepare the journal entries required, if any, to record impairments on Skysong intangible assets. (Assume that any amortization for 2021 has been recorded.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

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Answer 1

Answer:

Skylong Golf Inc Intangible Section of Balance Sheet December 31, 2019
Trade Names	6000
Copyrights 52800-(52800/40)*1/2	52140
Good Will (810000-(840000-220000))	190000
Total Assets	248140

Amortization expenses = (52800/40)*1/2 = $660

Journal Entry

Date	Particulars	Debit ($)	Credit ($)
	Amortization expense	1320
	Copyrights (52800/40)		1320

Skylong Golf Inc Intangible Section of Balance Sheet December 31, 2020
Trade Names	6000
Copyrights (52800-(52800/40)*1.5)	50820
Goodwill	190000
Total Assets	246820

----------------------------

Date	Particulars	Debit ($)	Credit ($)
	Loss on impairment	80000
	Goodwill (190000-110000)		80000
	Trade name (6000-6000)		0

Working Notes:

The fair value of Old master reporting unit	380000
Net Identifiable assets (excluding goodwill)	270000
(460000-190000)
Implied value of goodwill	110000